Friday, November 20, 2009

When you win a sweepstakes do you pay taxes before you get it or when you get it?

is it a scam when a organization say they will take the taxes out before you get them

When you win a sweepstakes do you pay taxes before you get it or when you get it?No, it is not a scam. If you win a sweepstakes, the prize money is subject to income taxes, and the organization can withhold income taxes before giving you the prize. This will be reported to the IRS on the 1099MISC that will also be issued to you. You may owe more or less than what was withheld. This is figured on your tax return.

Keep all documentation regarding the award, so that you have a record of where your prize money went.Reply:It's a scam if they ask you to pay the taxes by going to Western Union and sending it John Smith.

It's not a scam if you win a cash prize and they take the taxes out of your winnings. You would get a 1099-Misc for the prize and it would show both the prize and the withholdings.

If you win a car, you'd have to hand over a check for 20%, but only when you went in person to pick up the car.Reply:If they want you to send them money up front for taxes, delivery fees or anything else, yes it's a scam.

If it's a legit win, then they would take taxes out of the winnings, so if for example you won $10,000 they might take out $2000 for tax and send you the other $8000 - but if they asked you to send THEM the $2000 and said then they'd send you your winnings, it's a scam.Reply:It is not a scam if they are deducting the taxes from your winnings since they are the ones who must provide that money to the government. It is a scam if they want you to send them the tax amount before you actually get the winnings. A matter of fact that is the indication of a scam when they ask for money from you instead of deducting the tax money from the winnings.Reply:This is a scam!!! Do not give them any money.

You don't pay taxes on winnings until you receive the winnings, or until you file your taxes the following year.

You should report this organization to the fraud bureau of the IRS immediately.Reply:Yes, companies can withhold taxes that you would own on the winning amount. Same as if you went to a casino, and won a large amount.Reply:Scam.